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KUALA LUMPUR – Sime Darby Plantation Bhd’s (SDP) gross profits soared to RM788 million in the first quarter (Q1) of this year, marking a 35% increase compared to the same period last year, on the back of higher crude palm oil (CPO) and palm kernel (PK) prices.
The group also registered revenue of RM4,381 million for Q1 2022 compared to RM3,673 million for Q1 2021, an increase of 19%, said a statement by SDP.
Similarly, the higher revenue has compensated for lower fresh fruit bunch (FFB) production as the group continued to be impacted by the prolonged labour shortage in the Malaysian palm oil industry.
Currently, CPO prices in Q1 2022 are average at RM4,465 per metric tonne (MT), a year-on-year increase of 40% compared to RM3,185 per MT, while average realised PK prices in the same period increased by 84% year-on-year to RM4,105 from RM2,230 per MT.
Meanwhile, Sime Darby Oils registered a 23% increase in gross profits of RM132 million in Q1 2022 compared to RM107 million in Q1 2021, stemming from higher margins by its Asia Pacific bulk operations, which partially mitigated lower sales volumes and margins in its Asia Pacific differentiated and European operations.
SDP chairman Tan Sri Megat Najmuddin Megat Khas said the firm will continue to leverage on higher global demand for edible oils, including palm oil.
“The group has started the financial year with a solid set of results on the back of continuing high commodity prices caused by ongoing supply chain disruptions.
“As palm oil plays a crucial role in fulfilling the demand for vegetable oils in the global market, I am confident that SDP will be able to leverage on current opportunities and continue to deliver an encouraging performance in 2022,’’ he said.
Group managing director Mohamad Helmy Othman Basha also stated that SDP has submitted a comprehensive report to the United States Customs and Border Protection (USCBP) to address the requirements of the United States’ import regulations and international labour standards.
“SDP has engaged with USCBP on the submission and will continue to give our full cooperation as we work towards modifying (uplifting) the finding. Our commitment to continuous improvement extends beyond our own operations to include our entire supply chain, which we hope will help the industry to move forward proactively.
For the rest of the financial year (FY), the group expects palm oil demand to be impacted by the current elevated prices, which will be mitigated by the tight supply and availability of alternative vegetable oils as well as supply chain disruptions caused by the ongoing Russia-Ukraine conflict.
The group also anticipates lower overall FFB production against FY2021, as the intake of new foreign workers for the plantation industry is only expected to arrive in the second half of the year.
However, barring any unforeseen circumstances, the group expects encouraging performance for 2022. – The Vibes, May 20, 2022